SOCIAL RESPONSIBILITIES OF BUSINESS AND BUSINESS ETHICS

1. What do you understand by social responsibility of business? How is it different from

legal responsibility?
Ans: Social responsibility of business refers to its obligation to take those decisions and
perform those actions which are desirable in terms of the objective and values of our
society. It refers to the obligation of business towards various social groups like employees,
consumers, investors, government etc. In the words of H. R. Bowen, “Social responsibility of
business is to pursue those policies, to make those decisions or to follow those lines of
action which are desirable in terms of the objectives and values of our society
Legal responsibility is the responsibility that a business has by virtue of law. Differences
between Social and Legal Responsibility.

 Legal responsibility is compulsory under any of the laws, acts and constitution.
Social responsibility is not backed by legal provisions.
 Legal responsibility is compulsion while social responsibility is a choice.
 Many a time, legal responsibility is fulfilled in the name of social responsibility.
 There are no punishments for organizations not following their social
responsibility but legal action can be taken against organizations not following
their legal responsibility.

2. What is environment? What is environmental pollution?

Ans: By environment, we mean our surroundings, which have an impact on our lives. It is
the sum total of the surroundings and resources, including both biotic resources (i.e., living
creatures such as plants and animals) and abiotic resources (i.e., non-living things, such as
air, water and land) that affect our existence and quality of life. However, because of the
rapid increase in population and industrialisation, the excessive use of resources has
resulted in their degradation and depletion. Also, the discharge of harmful substances into
the environment has contributed towards pollution. Environmental pollution can be
classified into the following four types.

1. Air Pollution: It is caused by the emission of harmful gases into the

atmosphere.
2. Water Pollution: It is caused by the discharge of industrial and household
wastes into the rivers, thereby degrading the quality of water.
3. Land Pollution: This is caused by dumping toxic wastes on land, which in turn
damages it, making it unfit for agriculture.
4. Noise Pollution: It is caused by noise from factories and vehicles, which may
cause serious health problems such as loss of hearing or mental disorders.

3. What is business ethics? Mention the basic elements of business ethics.

Ans: Business ethics refers to the values and principles that govern the behaviour of
individuals in an organisation such that the business activities are desirable from the
viewpoint of society. The main purpose of business ethics is to guide managers and other
employees to perform their jobs in a manner that is socially acceptable.

The following are some of the elements of business ethics.

1. Top management commitment: Top-level officers, such as CEO’s and senior

managers, must strongly follow the ethical codes and guide the other
employees in adopting such behaviour.
2. Publication of a code: Enterprises must clearly define the ethical code of
conduct, which would include quality standards, laws governing production
and health and safety standards for the employees.
3. Establishment of compliance mechanism: In addition to standards, an
enterprise must also devise a mechanism through which compliance with the
code of conduct can be measured.
4. Involvement of employees at all levels: The successful implementation of
ethical standards requires the involvement of all the employees at all levels.
5. Measurement of results: Although it is difficult to measure the end results of
implementation of ethical standards, the top management should take steps
to measure the degree of compliance with the ethical codes.

4. Build up arguments for and against social responsibilities.

Ans:  Arguments for Social Responsibility:

1. Justification for Existence and Growth: Although the main motive of any

business is profit but the prosperity and growth of business is not possible
without a continuous service to the society. Therefore, it is justified for a
business to assume social responsibility.
2. Avoidance of Government Regulation: Businessmen can avoid the problem of
government regulations by assuming social responsibilities voluntarily which
helps to reduce the need for new laws.
3. Maintenance of Society: Those people who do not get a return for their
hardships get indulged in anti-legal activities. Therefore, it is advisable for
business enterprises to assume their social responsibilities.
4. Long Term Interest of the Firm: If consumers, workers, shareholders,
government officials feel that they are not getting what they deserve, they
start to withdraw their hands from business. It may prove more expensive for
an enterprise.
5. Availability of Resources with Business: A business enterprise has effective
human and financial resources to solve many of the social problems.
6. Converting Problems into Opportunities: Business can make risky situations
useful by using their efficiency.
 7. Better Environment for Doing Business: Business system should do something
to meet needs before it is confronted with a situation when its own survival is
endangered.
8. Holding Business responsible for Social Problems: Environmental pollution,
unsafe workplaces, corruption in public institutions and discriminatory
practices in employment are some of the problems which have caused due to
business enterprises.

Arguments against Social Responsibility:

1. Violation of Profit Maximization: As per this argument, business enterprises

claim that our objective is profit maximization. Business can reduce its cost
and raise profits and then only it can meet its social responsibility.
2. Lack of Social Skills: Business enterprises neither have skill nor experience to
solve all types of social problems. Therefore, it should be handled by
specialized agencies.
3. Burden on Consumers: Many of the social responsibilities cost a lot and its
burden falls on consumers only.
4. Lack of Broad Public Support: Business cannot operate successfully because of
lack of cooperation and confidence on behalf of public to business enterprises.

5. What steps can an enterprise take to protect the environment from the dangers of
pollution?
Ans: Various business activities such as production, transportation and consumption of
goods often result in over exploitation of natural resources. Thus, it is the responsibility of
every business enterprise to control discharge of pollutants into the environment. The
following steps can be taken by the business enterprises to control pollution.

 Control by top managers: The top management of every organisation should

be committed to creating, developing and maintaining a work culture
conducive to environmental protection and pollution prevention.
 Control by employees: Employees at all the levels of an organisation should be
committed to keeping the environment clean and protected.
  Better technology: Enterprises should employ good and superior technologies
of production and use scientific techniques for waste disposal. This will ensure
environmental protection and pollution control.
 Follow rules: Enterprises must conform to the rules and regulations enacted
by the government for the prevention of environmental pollution.
 Increased awareness: By conducting workshops and training programmes,
business enterprises must make an effort to spread awareness among its
employees of the need to conserve the environment.
  Assessment programmes: An efficient mechanism for the periodic assessment
of pollution control programmes may also be adopted, in order to weigh their
costs and benefits.

6. Explain the various elements of business ethics.

Ans: Business ethics can be defined as the code of conduct that a business must follow, such
that it takes up only those activities that are desirable from the viewpoint of society. The
purpose of business ethics is to guide managers and other employees in an organisation in
performing their jobs in a manner that is socially acceptable. Business ethics should be
followed in the day-to-day working of a business enterprise. The following are some of the
elements of business ethics.

 Commitment by top management: Top-level officers, such as the CEO’s and

other higher level managers, must sincerely follow the ethical code of conduct.
They should also guide other employees in their organisation in adopting the
code.
 Publication of a code: An enterprise must clearly define the ethical code of
conduct to be followed in the organisation. The code should include quality
standards for work, laws governing production and employee’s health and
safety standards.
 Establishment of compliance mechanism: In addition to setting performance
standards, an enterprise must also devise a mechanism through which it can
measure the actions of individual employees. This should be done in order to
confirm whether the ethical standards are being met.
 Involvement of employees at all levels: The successful implementation of
ethical standards depends to a large extent on the involvement of employees
at different levels. This is because it is the employees who actually implement
the ethical codes.
 Measurement of results: Although it is difficult to measure the end results of
implementation of ethical standards, the top management should take steps
to monitor compliance. Also, it must take serious action against any unethical
behaviour in the organisation.

7.Explain briefly the social responsibilities of business enterprise towards: (a)Workers,

(b)Consumers.

Ans: These are the Social Responsibility of Business Towards Different Groups and their
workers:

 On-time and regular payment of salaries and wages,

 Proper working conditions and well-being facilities,
 Opportunity for better job possibilities,
  Job safety and social security include provident funds, group insurance, pensions,
and retirement privileges.
 Proper living conditions like home, transportation, restaurant, etc.; and
 Timely education and improvement.

These are the responsibilities of businesses towards their consumers:

 Goods and services should be able to meet the needs of customers,

 Goods and services should have a high quality,
 Regularly supplement of goods and services,
 There should be a reasonable and affordable price for goods and services,
 All profits and losses of goods and procedures to use the goods must be informed to
the consumers,
 Proper function of after-sales service,
 Prioritize the grievances of the consumers and quick settlement,
 Unlawful means like under weighing the goods, corruption, etc., must be avoided.

8.Explain social responsibilities of business towards government and community.

Ans: Responsibility towards the government and community:
An enterprise must respect the laws of the country and pay taxes regularly and honestly. It
must behave as a good citizen and act according to the well accepted values of the society.
It must protect the natural environment and should avoid bad, effluent, smoky chimneys,
ugly buildings dirty working conditions. It must also develop a proper image in society
through continuous interaction with various groups of people.

9.”There is a strong case for the business to fulfill its social obligations”.Give four reasons
in support of your answer.
Ans: The four reasons that can support the statement "There is a strong case to fulfill its
social obligation" are :-

i) Building the Brand : In order to build it's brand a company has to focus on it's social
responsibility. A socially responsible brand has a positive public perception towards them.

ii) Increased sales : When a customer sees that a portion of the money they spent on a
product or service goes to a social cause, they buy it more often which ultimately boosts the
sales.

iii) Tackling the competition : In the current scenario when there is a very less room for
product improvement and low pricing for a given product among the competitors, a socially
responsible company has a better chance to stand out of the crowd and have a positive
acceptance in the market.
iv) Job satisfaction : Top talents would never want to leave a socially responsible company
being a part of a socially responsible company boosts their morale and job satisfaction
therefore helps in retaining the employees.

10.What is meant by business ethics? State the features of business ethics giving
examples. Ans: Ethics is concerned with what is right and what is wrong in
human behaviour judged on the basis of socially determined standards of behaviour.
Business ethics concerns itself with relationship between objectives, practices, and
techniques and the good of society. Ethics is important for every
business. .

The following are the important characteristics or features of business ethics.

1.Code of ConductBusiness ethics is a code of conduct. It tells what to do and what not to do
for the welfare of thesociety. All businessmen must follow this code of conduct.

2. Based on Moral and Social ValuesBusiness ethics is based on moral and social values. It
contains moral and social principles (rules) forDoing business. This includes self-control,
consumer protection and welfare, service to society, fairtreatment to social groups, not to
exploit others, etc.

3. Gives Protection to Social GroupsBusiness ethics give protection to different social

groups such as consumers, employees, smallbusinessmen, government, shareholders,
creditors, etc.

4. Provides Basic FrameworkBusiness ethics provide a basic framework for doing business. It
gives the social, cultural, economic,legal and other limits of business. Business must be
conducted within these limits.

5. VoluntaryBusiness ethics must be voluntary. The business men must accept business
ethics on their own.Business ethics must be like self-discipline and it must not be enforced
by law.

6. Requires Education and GuidanceBusinessmen must be given proper education and

guidance before introducing business ethics. Thebusinessmen must be motivated to
use business ethics. They must be informed about theadvantages of using business
ethics. Trade Associations and Chambers of Commerce must also playan active role in this
matter

7. Relative TermBusiness ethics is a relative term. That is, it changes from one business to
another. It also changesfrom one country to another. What is considered as good in one
country may be taboo in anothercountry.

8.Diagnostic in NatureAfter examining the various aspects of business dealings, operations

and management techniques, itis possible to know the ethical or non ethical nature of the
business.
11. “The business is responsible for aggravating pollution, so it becomes the moral duty of
businessmen to take some positive steps for controlling this problem.” In the light of this
statement explain the role of businessmen in checking pollution.
Ans: A businessman can play the following role:
He may ensure that he makes use of eco friendly methods of production as far as possible.
He may ensure that in case any pollution occurs, the waste is discharged in proper manner
as per the provisions of pollution control boards. He may also create awareness amongst
employees on how can they minimize this pollution by initiating workshops, seminars. .